Graph of the Day: How solar PV slashed electricity demand

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Study shows how solar PV and energy efficiency drove down demand, leaving consumers with an over-sized, expensive grid that has driven up bills.

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Every Australian household is aware of just how much electricity bills have risen in the past five years. They have effectively doubled, driven almost entirely by soaring network costs – the result of building a grid for demand forecasts that were never met.

And the reason they were never met is because the energy industry scoffed at two major innovations – energy efficiency and rooftop solar. Consumers ended up paying billions of dollars for an oversized network, in anticipation of demand peaks that never eventuated.

A new study from researchers from the Melbourne Energy Institute and RMIT in Victoria – titled Five Years of Declining Annual Consumption of Grid-Supplied Electricity in Eastern Australia: Causes and Consequences – has highlighted how demand has been reduced in the last five years.

MEI solar demand reduction

The authors note that there has been an overall decline (reflected in area 1), as a result of energy efficiency measures and behavioral change that apply during all hours of the day, as well as large-scale industrial closures, and constantly loaded embedded generation.

That accounts for around 1GW of reduction on average. In the early morning, from about 2am (area 2) there have been demand reductions of nearly 1.5GW due to the phasing-out and/or improved efficiency of resistive-electric ‘‘off-peak water heaters’’. Remember, these were introduced to keep the coal-fired generators busy during the night.

The biggest declines, however, come in area 4, where solar PV plays a major role. This has knocked up to 3GW off demand in the middle of the day.

Indeed, since the big push into rooftop solar PV by Australian households – there are now 1.44 million households with a total of 4.4 GW of rooftop solar – there have been no more “super peaks” in electricity demand.

The highest peaks all occurred between 2009 and 2011, and in the middle of the day or mid afternoon. These peaks are now covered by rooftop solar, which in most states has pushed the average peak into the evening. This is one of the unsung, and unrewarded, benefits of rooftop solar PV.

“One reason why no new records have been set since 2011 is because the deployment of rooftop solar PV has reduced maximum demand for grid-supplied electricity during midday hours,” the authors note. “Solar PV has also shifted the time-of-day at which maximum demand might occur until later in the day.”

In total, the authors noted that in the five years since 2009, annual electricity consumption in eastern Australia has declined by 7 per cent, even while the Australian economy grew by 13 per cent.

MEI forecasts

As the graph above shows, even as recently as 2011, declining consumption was not forecast by the planning authority nor by market participants. (Compare the dotted line forecasts of 2011 with the hyphenated line at bottom right for 2014). But consumers are still paying for those inflated forecasts, and will continue to do so.

This is having major consequences for incumbents, trying to pass on excessively high prices (Australia’s electricity costs are among the highest in the world), while new technologies such as solar PV, battery storage, and smart software offer cheaper alternatives.

The problem facing policy makers and regulators is that in response to overbuilding of electricity infrastructure and declining use of the infrastructure, industry incumbents are trying to reverse energy efficiency, renewable energy, and climate change mitigation programs.

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15 Comments
  1. john 4 years ago

    Every country that has put in a significant proportion of PV has seen the old bell curve turn into a duck curve graph for demand.
    Now the opponents of PV are parroting the story that PV can not fill the peak in the evening; or yes it can; with battery backup, which reduces the evening demand and the morning demand so that the curve will be a lot flatter with the evening still higher than the morning, but ever decreasing as more and more battery backup is put in place.

    • Mark Roest 4 years ago

      Your last sentence is really what’s called for, particularly when you combine it with this paragraph in the article: “And the reason they were never met is because the energy industry
      scoffed at two major innovations – energy efficiency and rooftop solar.
      Consumers ended up paying billions of dollars for an oversized network,
      in anticipation of demand peaks that never eventuated.”

      An ordinary company would be told, too bad, you blew it; your hubris caused the loss of your stockholders’ money. The story would be told to one and all, so that other egotistical titans of industry would think twice about gold-plating for their own gain, or scoffing at the disruptive potential of new technologies after the example of the Internet.

      • john 4 years ago

        I do not blame the Governments who worked on their advice for the expend.
        I do however think it is not fair or reasonable to expect the ordinary rate payer to pay for that bad business decision.
        However lets look at what is happening some state governments are trying to dispose of the grid and they will obviously try to ensure that the assent has the best value possible.
        You are absolutely correct the bad business expend on the Grid has to be written down any other way of mitigating this only results in the consumers paying for the decision.
        As everyone has seen network costs have cause the rise in the cost of power nothing else.

      • john 4 years ago

        Mark you are correct.
        However it is State Governments who spend the money.
        Now they wish to sell the liability to a second buyer.
        Naturally they wish to make sure that the asset is valuable after all it is taxpayers money.
        So the way they are trying to ensure they can sell at a decent figure is to try to stop the every increasing encroachment on the actual demand so put in place a “delivery price” or “demand charge” call it what ever you like.
        Lets face it we as in every government in the Eastern Grid made a mistake; admit it and write down the value of the expend and put good governance in place.
        Unfortunately because of the electoral cycle and we work on 3 year cycles we actually do not have any good governance at all.

      • john 4 years ago

        I am finding a duck curve

        • Mike Dill 4 years ago

          That graph is from 2013. 2014 and later are projected. It was meant to be a ‘worst case’ for maximum solar with no heating or cooling loads. From what I have heard, wind is actually flattening the neck and head, and demand shifts have flattened the belly.
          I am still looking for what actually has happened since 2013.

    • Mike Dill 4 years ago

      The problem with the ‘duck curve’ is that the duck did not show up. CAISO has not published the results for the last two years for the curve, as the duck is not there. That evening peak is mostly being covered by wind.

      Most of us with solar use what we can of the energy we generate. While solar has pushed down peak grid demand, it has not drastically cut into the ‘belly’ or ‘base load’, which was what was predicted. I pre-cool my house with my own electricity in the day so that I do not contribute to what would have been the ‘neck’ and ‘head’ of the duck.
      Yes, as you have suggested, we need to look at the present daily load profile to see where we can do a better job of cutting the head off this “duck” monster.

      • JeffJL 4 years ago

        WA has a lovely ‘duck curve’.

        More an engineering and political challenge than a problem.

  2. john 4 years ago

    Giles can you add the present duck curve to show how the situation has changed

  3. trackdaze 4 years ago

    Reason enough that Queensland introduce daylight savings. No, no,no it won’t save up daylight but it will shift/smooth the new peak in demand to when solar power can moderate peak usage.

    Good news of sorts!!Demand in the southern states is likely to reduce in next year or two with Abbott and co cancelling the car industries visa’s and basically telling them to hurry up and leave as it has done with the wind industry.

    Team coalstralia!

  4. Russell Harris 4 years ago

    It’s worse than you say. They’ve built a system to handle peaks that never came instead of building a system that is able to connect millions of generators with millions of consumers.

    The money has been wasted to prop up the wrong kind of network. How much will it cost to build the network we need?

    R.

    • john 4 years ago

      We have a good network what is needed is a smart transformer network not 1920’s transformers which you presently have.
      There is no gain putting more power into the local grid which just pumps up the voltage it needs to be stabilised and transmitted to users not wasted.

    • Ian 4 years ago

      The electricity grid is already there, it has already been beefed up to handle the non-existent peaks we are told. What are missing, are simple laws and rules allowing generalised access to the grid for power exports, and of course a fairer export Tariff. In the house-hold market, solar should be king, the other technologies can complement this if they like, or find themselves some other customers. Wind, hydro,pumped storage, large scale batteries, solar thermal ,geothermal can all find their place filling the consumption curve. The networks better wisen- up and embrace this distributed generation web model before domestic battery storage makes poles-and-wires largely irrelevant.

      In fact, the time may have come for solar system owners to group together suburb-wide to create mini grids. The idea here is to install container sized battery storage such as flow battery technology in a suburb or town, as the main supply hub,export excess household or community generated solar to charge this and then allow the network providers to bid on any shortfall. The community’s central electricity ” server” need not be one massive bank of batteries, it could be a ” virtual battery” orchestrating smart loads and distributed batteries. If the clean energy finance corporation can splash out $400 000 for a trial of 33 home energy systems for ergon, then they can come up with the financial goods for community owned mini grids. The benefits would be there. top-up power from the existing network could be trickle-fed into the suburb’s main battery at times of excess network supply. Reliability of supply would be handed back to communities and they could self-fund smart loads, energy saving street lamps and the like.

      Here is a little calculation to show the feasibility of community storage. 2000 houses, daily consumption on average 16KWH. 1/2 energy produced stored for nighttime use. That is 32 000KWH. Estimated cost of flow battery storage $300/KWH. That is $4.8 million or $2400 per house. Current network connection fee $1.50 per day. That is about $500 per year. Current import tariff less export tariff 22c – 5c = 17c/KWH x 8 x 365 is about $ 500 per year. Pay back time 2.4 years! Take note and shudder Ergon, up yours Energex, Booyah Ausgrid!

    • Alastair Leith 2 years ago

      Golden parachutes for the privatised network corporate executives no doubt, increased revenue in the face of declining demand and declining peaks. Even AEMO was asleep at the wheel for a good 5 years (or maybe they weren’t asleep but motivated to cater to private interests).

  5. Malcolm M 4 years ago

    In Victoria the power industry persuaded the government that all consumers should have smart meters, and their cost was built into our power bills. While reduced meter reading costs were part of the rationale, I recall some claimed advantages of demand responses, that when spot power prices are high consumers could defer power use. Now that the meters have been installed State-wide all has gone quiet. As a residential consumer I have no access to electricity purchase plans tied to the spot power price. The only time of use charging is that after 11 pm the cost per kWhr reduces by about 40% (so that’s when we run the dishwasher). But we didn’t need smart meters to achieve such a simple charging formula – the old meters could have done do that. The demand response argument would have been that it could save on network upgrades, but they went ahead with the network upgrades as if the smart meters wouldn’t have an impact.

    Where is the ex ante evaluation of the investment all consumers had to make in smart meters ? Can any industry insiders shed some light on this ?

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